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On Wednesday afternoon, Tesla released its Q2 2017 financial results: a loss of $401 million from total revenues of $2.7 billion over the three months up until June 30th. That's more or less the same performance as the company reported for Q1 2017, but it does show a 49 percent jump in revenue and 53 percent jump in vehicle deliveries compared to the same period in 2016. Depending upon whether Generally Accepted Accounting Practices (GAAP) were used, the net loss to shareholders was $2.04 per share (GAAP), or $1.33 per share (non-GAAP). It ended the period with $3 billion in cash.

During the quarter, Tesla produced 25,708 Model S and Model X electric vehicles and delivered 22,026 of them to customers. Sales of zero-emissions tax credits brought in another $100 million, and the company's energy generation and storage activities saw a big increase, bringing in $287 million (compared to $214 million for Q1 2017 and just $3.9 million for Q2 2016). The company's operating expenses actually decreased compared to Q1 2017, despite spending almost $48 million more on research and development.

Further Reading

In its earnings statement, Tesla revealed that it has been averaging 1,800 Model 3 reservations a day since the handover of the first production cars on July 28th. First deliveries to non-Tesla employees will begin in Q4 this year. Tesla says that production of the Model 3 will be limited by the slowest part of its supply chain and manufacturing process, but the company is confident it can build "just over 1,500 vehicles in Q3." Output of the new EV is predicted to rise to 5,000 per week by the end of 2017. CEO Elon Musk told an earnings call that "what we have ahead of us is an incredibly difficult production ramp. But I'm very confident we can reach a rate of 10,000 vehicles per week by the end of next year."

For the second half of the year, Tesla expects its prospects to improve significantly with operating costs remaining flat but revenues increasing thanks to Model 3 sales. On the earnings call, Musk was keen to stress that despite the introduction of the Model 3, the much more expensive Model S remains a better vehicle. "The S is still the superior sedan," Musk said. "Things got a little confusing because of the nomenclature—my fault for being too clever for my own good there."

We also received clarification about the Model Y compact SUV. During the Q1 2017 earnings call in May, Musk had said that the Model Y would use a unique platform; now we know that's not the case. "Upon the council of my executive team, the model Y will in fact use substantial carryover from the Model 3 in order to bring it to market faster," he said.

Musk also revealed that he spends much of his time at Tesla working on Autopilot. "I spend a lot of my week working on Autopilot with the team, right down in the trenches," he said. "I think the release that should go out soon, people will be really pleased with it."

Further Reading

With regards to energy systems, for Q2 2017 Tesla deployed 176 MW of solar power and 97MWh of energy storage, although that number includes a 52MWh installation in Hawaii that was actually completed in Q1 but which only recently passed inspection. Additionally, it says that it has begun to install Solar Roof tiles this quarter. "I have it on my house," Musk said, adding that the photos of a Solar Roof in the earnings letter were of his house.

In response to a question about Tesla's capital expenditures, Musk briefly discussed plans to build several more Gigafactories, not all of which will be in the US. "We expect to keep the majority of our production in the US, but it obviously makes sense to establish a Gigafactory in China and Europe to serve the markets there because it's nuts to build cars in California and then ship them halfway around the world," Musk said. "We want our cars to be as affordable as possible." Announcements on those locations are expected by year's end, but Musk said that the associated costs of building the new Gigafactories was still a way off.

249 Reader Comments

Their balance sheet is also completely farked because of the solar acquisition. They show over $6 billion in solar systems leased and to be leased, for which they are generating very little gross profit, so are losing money after operations. So those assets are worthless.

Actually, they get quite a bit of cash from their solar operations. The issue with SolarCity as a standalone company was the costs associated with their growth level. The cost of making that level of sales growth was too high. Now, as part of Tesla, they are not attempting to grow residential solar nearly as quickly. They dropped a tremendous amount of head count as a result, primarily in sales. As a result, the actual portfolio of solar systems is cash generating. Not only that, they went from a very high percentage of leased systems to a much lower percentage of leased systems with also improved their financial picture. Matter of fact, they sold off the equity interest in already deployed solar leased systems for $313 million in this past quarter. The gross margin on their solar + energy storage unit was 28.9%, or about $82 million... that's not very little gross profit.

The solar lease accounting is very complex and there is considerable disagreement over the financial terms. They were financing at too short of a period and there was considerable risk when it came to refinancing. As part of Tesla, they have much better terms for both the initial financing and the refi's. The re-financing risk was a big source of the disagreements... if Solarcity couldn't get access to good terms, then their business model was sunk. If they could, then they would have been fine. As part of Tesla, that was no longer the big issue that was before.

Let's assume Tesla could generate $5,000 in after-tax free cash flow for every vehicle sold, which is incredibly aggressive. So they'd need to sell roughly 1.3 million cars annually to make the current price somewhat reasonable.

There are 17 million cars sold in the US annually. So Tesla will need to take about 8% of the entire US market. I'm pretty sure the other automakers aren't going to sit around and watch this happen. No saying it's impossible, but there is still a lot to prove, but the company is being priced as if they are already selling 1.3 million cars per year and making gobs of positive cash flow.

Lots of hype for a hope.

So.. gross margins on the Model 3 is guided to eventually be 25% once volume ramp is up at the 5k/week range. The ASP is likely around $45k at that point. That's $11,000 per car. The Model S/X is around 25% gross margin also, but with an ASP around $95k. That's $24k/car. At end of this year, the run rate looks like 230,000 Model 3's and 100,000 S/X which results in $2.5 billion in gross profit on the Model 3's and $2.4 billion in gross profit on the S/X on an annual basis. That's $1.2 billion in a quarterly basis on just automotive. Opex is ~$0.9 billion/quarter, so add a bit to that and interest expense, and we're looking at a $100 million in operating profit. Then add in the solar and stationary storage unit, which likely doubles the operating profit at that point. Stationary storage is still very much in the early stages and that growth is expected to be massive, potentially really showing up in Q4 and Q1. Throw in doubling the Model 3 build plan to 10k/week, and then eventually monetizing transport as a service as well as Model Y CUV, Tesla Semi, solar panels, and solar roof projects in the coming years. The market is expecting growth and they've been getting it. Free cash flow is expected to continue to be negative as they continue to spend money heavily on capex. At this stage of the company, they should not be showing positive free cash flow as the growth opportunities are significant.

It is important to assign expenses in SG&A and R&D to separate business units and startup projects and not all to the current Model S/X/3 businesses. Otherwise, you are obscuring an accurate read on their current automotive business.

People talk about burn rate but it is very important to know where that burn is going. The vast majority of it is going into plant and equipment which will end up making them money over time. It isn't like they're blowing it on gold leaf furniture or junkets for the company to go to the Caribbean. As a result, the expenditures for the Model 3 ramp will end up increasing revenue. At a run rate of 5,000/week or so which they hope they get to at the end of this year, they hit a point where their gross profit exceeds their opex. And that means positive cash flow from operations. As they get to 10k/week through 2018, their automotive business starts to really generate profits. Now, what they choose to do with those profits becomes an issue... most likely, they plow it back in for expansion which includes new product lines.

The biggest issue has been cash in order to make it through Model 3 launch and they appear to be well positioned.

CAPEX is not the reason they are burning cash they lose money on operations. They lost 200 million just this Q from Operations. They lose money every quarter from operations except when they decide to manufacture a profit by selling off ZEV. The numbers this Q are not as bad as they could have been because of a ZEV sell off. All of their CAPEX has been from outside money.

They have never made money from selling cars in the past what makes you think they will in the future? That has been their biggest problem as their revenue goes up their Costs hvae gone up faster.

EDIT: To all the downvoters show me the 10Q that says I am wrong.

I only need your own comment to show that you're wrong - the bolded part.

It doesn't matter where their CAPEX money comes from, if it's an expense, it's counted as an expense in their profit and loss, not to mention that Tesla's losses are not JUST because of Capex, but a combination of Capex AND R&D, both of which are investments with long- (not short-) term returns. And which I'll point out given their positive cashflow on each EV sold, are investments which have been proven to pan out.

CAPEX does not at all appear on a P/L sheet. CAPEX is not an expense (except for depreciation which is not an issue here) because its an assist.

It does matter because people continue to try to claim that TSLA is spending their "profits" on CAPEX like they are Amazon. This is not the case as TSLA has never produced a profit from selling cars.

TSLA has never had positive cash flow from selling cars not even in the two-quarters they manufactured a profit. This is easly seen in every single 10Q TSLA has reported.

Current period Capex doesn't show as an expense but amortisation, depreciation and just write-downs of previous period Capex certainly does.

And an exec at Mazda pretty much spouted Republican esque talking points, trashing evs. I wonder what the Japanese part thinks. Total shame. Goodbye Mazda.

Also, everyone likes to trot out how gm is idling bolt production. Well, that's because the Sonic built there is 40% down yoy sales. Guess what? They said they are tooling the factory to go from 2 sonics per a bolt made to a 50/50 mix.

CAPEX is not the reason they are burning cash they lose money on operations. They lost 200 million just this Q from Operations. They lose money every quarter from operations except when they decide to manufacture a profit by selling off ZEV. The numbers this Q are not as bad as they could have been because of a ZEV sell off. All of their CAPEX has been from outside money.

They have never made money from selling cars in the past what makes you think they will in the future? That has been their biggest problem as their revenue goes up their Costs hvae gone up faster.

EDIT: To all the downvoters show me the 10Q that says I am wrong.

You seem to be trying to imply that selling ZEV credits is somehow "bad"

Should a company not sell something they created and has value?

It's a completely artificial market, not a good. The gov't could get rid of it tomorrow and 100% of your customers would dry up. For farm subsidies, that's not likely. For electric car subsidies, much more. It's a risk, and equating that revenue with selling actual products is dumb. They should really be thought of as some great one-time bonus revenue, not dependable, growable revenue that scales with your company.

People talk about burn rate but it is very important to know where that burn is going. The vast majority of it is going into plant and equipment which will end up making them money over time. It isn't like they're blowing it on gold leaf furniture or junkets for the company to go to the Caribbean. As a result, the expenditures for the Model 3 ramp will end up increasing revenue. At a run rate of 5,000/week or so which they hope they get to at the end of this year, they hit a point where their gross profit exceeds their opex. And that means positive cash flow from operations. As they get to 10k/week through 2018, their automotive business starts to really generate profits. Now, what they choose to do with those profits becomes an issue... most likely, they plow it back in for expansion which includes new product lines.

The biggest issue has been cash in order to make it through Model 3 launch and they appear to be well positioned.

CAPEX is not the reason they are burning cash they lose money on operations. They lost 200 million just this Q from Operations. They lose money every quarter from operations except when they decide to manufacture a profit by selling off ZEV. The numbers this Q are not as bad as they could have been because of a ZEV sell off. All of their CAPEX has been from outside money.

They have never made money from selling cars in the past what makes you think they will in the future? That has been their biggest problem as their revenue goes up their Costs hvae gone up faster.

EDIT: To all the downvoters show me the 10Q that says I am wrong.

They had cash flow from operations decreasing by $200m. However, like always, you can't take that as "they burned through $200m on operations".

See the line "Changes in operating assets and liabilities, net of effect of business combinations" that's about $480m? That's the change in inventory, accounts receivable, accounts payable, etc. Your general trading accounts. What's happening here is you're seeing the buildup to the Model 3 release. Inventory goes up, receivables go up as you take orders, prepaid expenses go up as you settle out what you need to sell cars in the future. It's not really a bad thing (indeed, a growing company will usually have a negative here).

It only becomes a bad thing when a company is sitting on a pile of inventory it can't shift, or when it's debtors aren't paying. That's not really an issue with Tesla (who, while has a fair bit of stock of X's and Y's, isn't growing inventory building those).

Essentially you could pick any number in there and blame it for the cash burn. They spent $200m reducing debt, they stopped issuing stock (which becomes an issue if they stopped issuing because no one would buy it), they spent a billion dollars on CAPEX, etc.

Fact of the matter is, they've gone through $200m of cash in the past 12 months and have $3b in the bank. That would suggest, to me, that their cashflow isn't a short term problem as they have no issue raising funds and they're investing heavily in a product that could make them piles of cash in the near future.

Fascinating to read the comments above. You're not going to get very good or objective analysis from most people here I would imagine. TSLA is one of the, if not the most, shorted stock on the NASDAQ and consequently there are billions of dollars at stake to force the company's stock downwards. So it stands to reason that most of the comments here will be negative.

However there is a group of people out there who have spent a lot of time thinking about this and have been following the EV story, Tesla and otherwise, for a long, long time.

At this point, I'd say that the arguments for Tesla, and EVs in general, to be the dominant player in the auto industry for the latter half of the century are reasonable indeed.

Tesla's biggest problem is that the sales of electric vehicles depend very much on the subsidies given by governments. Currently, in Europe, many countries give thousands of euros tax discount on the sell of an E.V., and owners don't need to pay annual car tax. But as soon as these subsidies stop, sales of E.V. drop to zero.

Or worse, because as they're built and marketed by a traditional automaker, the dealers buy them, taking them out of inventory. So a lot of the float that Tesla has to maintain is soaked up by the dealerships.

Tesla's biggest problem is that the sales of electric vehicles depend very much on the subsidies given by governments. Currently, in Europe, many countries give thousands of euros tax discount on the sell of an E.V., and owners don't need to pay annual car tax. But as soon as these subsidies stop, sales of E.V. drop to zero.

They're selling well here in Australia where there are exactly zero subsidies for EVs and not very many superchargers as yet. They're regarded as desirable high-end cars. There are no discounts on annual registration fees or any other tax breaks.

So two thoughts. The first is I am sure the haters will jump on the $400M loss but $3B in the bank means two years worth of burn at this rate. They will win or lose on the Model 3 within two year.

The second is the flat Model S/X sales. I think this is an indication that the market for $70K to $130K EVs is only so big. They might get to 100K non Model 3 sales per year but it won't ever be 500K.

For those thinking of getting a model S 75 if you want a single motor act quick. Tesla sales rep told me they are discontinuing the single motor version at some point this year. I assume this is to create more price separation between Model 3 and Model S/X.

On the flat S/X sales - there are still major emerging markets that Tesla has yet to enter. Every country has a market for high-end cars. Of course, every market varies on things like import duties and EV policies, so it's not as simple as importing a Mercedes or Audis where the refueling and servicing infrastructure already exists.

Tesla is going be in a world of hurt if/when the rest of the automotive industry catches up in distance and quickness and brings along a cockpit that is not spartan and creaky...

Or government subsidies dry up and they have to compete toe-to-toe with IC vehicles on cost. The market for EV's is less than 1% of the total automotive market so it will be a long time before they are able to achieve similar economies of scale to more mainstream automakers.

The solution to that is easy: increase the cost of ICE vehicles to reflect their true cost, including carbon/environmental footprint.

If Gas prices where around 10 USD per gallon (which they should be) then perhaps we could stop arguing about how horribly "expensive" EVs are? The only reason EVs can't compete with ICE vehicles is because the world is indirectly subsidizing anything and everything that burns fossil fuel.

Probably not a rule, but this shows that if you want to move things fast, innovate and do a real change in any industry, you have to push hard and not think about profits. I think Tesla investors understand this (they are not like Apple investors, fortunately) and they do understand that they are making a huge change that we will benefit from if it succeeds.I think that the reason Tesla survived is first and foremost this way of thinking that Elon and he's backing guys had from the beginning. They didn't think at the money in the first place, they just put all in, to move forward and get over any obstacle. And I think this is a great example to all start-ups and small businesses that give-up early.

So two thoughts. The first is I am sure the haters will jump on the $400M loss but $3B in the bank means two years worth of burn at this rate. They will win or lose on the Model 3 within two year.

The second is the flat Model S/X sales. I think this is an indication that the market for $70K to $130K EVs is only so big. They might get to 100K non Model 3 sales per year but it won't ever be 500K.

For those thinking of getting a model S 75 if you want a single motor act quick. Tesla sales rep told me they are discontinuing the single motor version at some point this year. I assume this is to create more price separation between Model 3 and Model S/X.

I pretty much agree with all this. Tesla's raised enough cash to survive a few years, which gives them time to ramp up the Model 3.

I also agree the supercar market is only so large, and is essentially saturated at this point.

Basically: It comes down to Model 3 sales. If it flops, Tesla won't have enough cash on hand to survive long enough for another go, and I doubt they'll find enough investors to make the difference. If nothing else, the Model 3 has to sell enough to keep Tesla in the black.

My main concern is that $35k is a bit too expensive, especially if the federal tax credit goes away. Hopefully successive models lower the price down to below the $30k price point, which would if nothing else put serious price pressure on other fuel efficient cars.

Mercedes-Benz sells somewhat over 400k C-class cars and BMW sells about the same number of 3-series. Audi A4 sold over 300k units and A3 I couldn't quickly find the figures, but almost certainly more than A4's.

Add Lexus, Infiniti etc. and it is clear that there is a huge market for cars priced like that.

People talk about burn rate but it is very important to know where that burn is going. The vast majority of it is going into plant and equipment which will end up making them money over time. It isn't like they're blowing it on gold leaf furniture or junkets for the company to go to the Caribbean. As a result, the expenditures for the Model 3 ramp will end up increasing revenue. At a run rate of 5,000/week or so which they hope they get to at the end of this year, they hit a point where their gross profit exceeds their opex. And that means positive cash flow from operations. As they get to 10k/week through 2018, their automotive business starts to really generate profits. Now, what they choose to do with those profits becomes an issue... most likely, they plow it back in for expansion which includes new product lines.

The biggest issue has been cash in order to make it through Model 3 launch and they appear to be well positioned.

I haven't been following Tesla but compared to the traditional automotive industry in the US, how automated is the production line at Tesla? I wonder part of the drive down in costs will be the automation of production lines when compared to the rest of the US industry that still seems to have a lot of people doing jobs that in Japan are automated resulting a factory at best having a dozen workers at anyone time. What I'd love to see is Tesla to branch out into building scooters and motorcycles - I'd love to trade in my 50cc scooter for a battery powered one that I can recharge at home over night and charge when I get to work if I want.

Tesla is going be in a world of hurt if/when the rest of the automotive industry catches up in distance and quickness and brings along a cockpit that is not spartan and creaky...

Or government subsidies dry up and they have to compete toe-to-toe with IC vehicles on cost. The market for EV's is less than 1% of the total automotive market so it will be a long time before they are able to achieve similar economies of scale to more mainstream automakers.

The solution to that is easy: increase the cost of ICE vehicles to reflect their true cost, including carbon/environmental footprint.

If Gas prices where around 10 USD per gallon (which they should be) then perhaps we could stop arguing about how horribly "expensive" EVs are? The only reason EVs can't compete with ICE vehicles is because the world is indirectly subsidizing anything and everything that burns fossil fuel.

Normally you'd tax each (metric) ton of CO2 similarly. For example a $1/tax on gallon of fuel equals a tax rate of roughly $110 / ton of CO2.

If you'd tax CO2 with $110/ton (equivalent of $1/gallon of gas), it would equate to a a cost of 6.3c/kWh for natural gas electricity producer. Not completely unreasonable I think.

You are proposing something like $6/gallon tax on fuel, which would equate about 40c/kWh tax on electricity generated from natural gas and much higher for coal plants. I don't see this happening any time soon...

Tesla is going be in a world of hurt if/when the rest of the automotive industry catches up in distance and quickness and brings along a cockpit that is not spartan and creaky...

Or government subsidies dry up and they have to compete toe-to-toe with IC vehicles on cost. The market for EV's is less than 1% of the total automotive market so it will be a long time before they are able to achieve similar economies of scale to more mainstream automakers.

The solution to that is easy: increase the cost of ICE vehicles to reflect their true cost, including carbon/environmental footprint.

If Gas prices where around 10 USD per gallon (which they should be) then perhaps we could stop arguing about how horribly "expensive" EVs are? The only reason EVs can't compete with ICE vehicles is because the world is indirectly subsidizing anything and everything that burns fossil fuel.

Normally you'd tax each (metric) ton of CO2 similarly. For example a $1/tax on gallon of fuel equals a tax rate of roughly $110 / ton of CO2.

If you'd tax CO2 with $110/ton (equivalent of $1/gallon of gas), it would equate to a a cost of 6.3c/kWh for natural gas electricity producer. Not completely unreasonable I think.

You are proposing something like $6/gallon tax on fuel, which would equate about 40c/kWh tax on electricity generated from natural gas and much higher for coal plants. I don't see this happening any time soon...

What do you think would happen to renewable energy? Could this approach - strictly theoretically speaking off course - make it attractive to increase use of hydro, solar and wind power?

EVs are no good if they're just a new way to burn fossil fuel. They need to be the easy way to equalize the natural instability of renewable energy. Which I also think is quite realistic.

Tesla is going be in a world of hurt if/when the rest of the automotive industry catches up in distance and quickness and brings along a cockpit that is not spartan and creaky...

Or government subsidies dry up and they have to compete toe-to-toe with IC vehicles on cost. The market for EV's is less than 1% of the total automotive market so it will be a long time before they are able to achieve similar economies of scale to more mainstream automakers.

The solution to that is easy: increase the cost of ICE vehicles to reflect their true cost, including carbon/environmental footprint.

If Gas prices where around 10 USD per gallon (which they should be) then perhaps we could stop arguing about how horribly "expensive" EVs are? The only reason EVs can't compete with ICE vehicles is because the world is indirectly subsidizing anything and everything that burns fossil fuel.

Normally you'd tax each (metric) ton of CO2 similarly. For example a $1/tax on gallon of fuel equals a tax rate of roughly $110 / ton of CO2.

If you'd tax CO2 with $110/ton (equivalent of $1/gallon of gas), it would equate to a a cost of 6.3c/kWh for natural gas electricity producer. Not completely unreasonable I think.

You are proposing something like $6/gallon tax on fuel, which would equate about 40c/kWh tax on electricity generated from natural gas and much higher for coal plants. I don't see this happening any time soon...

What do you think would happen to renewable energy? Could this approach - strictly theoretically speaking off course - make it attractive to increase use of hydro, solar and wind power?

EVs are no good if they're just a new way to burn fossil fuel. They need to be the easy way to equalize the natural instability of renewable energy. Which I also think is quite realistic.

Of course it would. And it would be by far better way of encouraging renewables than stupid feed-in tariffs, tax credits for electric cars and solar roofs etc. At the moment I see it politically very much impossible. Even Paris accord (that US doesn't take part) doesn't go anywhere towards taxing CO2 production globally, which would be the ideal.

Let's put these numbers into some kind of perspective:

"In 2014, U.S. greenhouse gas emissions totaled 6,870 million metric tons of carbon dioxide equivalents" (EPA.gov report)"The U.S. government's total revenue is estimated to be $3.654 trillion for fiscal year 2018."(thebalance.com article).

Divide these and you'll figure out that a tax of $532 / metric ton of CO2 could replace all and every federal tax in US. So if natural gas electricity was taxed at about 35c/kWh and gas something like $5/gallon, you could replace all federal taxes.

I would be happy to see a $150/ton CO2 tax if major countries would all sign up for it. They could considerable reduce other taxation to offset the cost to the people while heavily moving incentives for business to reduce CO2 generation. Even $50/ton could make a difference and it would be easier to accept for developing nations.

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

I understand the disconnect. But note that GM and Ford make most of their money on bread and butter vehicles with very low margins. BMW does not. Matter of fact, the luxury car market is very small component of the overall car market, but the revenues is quite large. Something like 7-8% of the overall U.S. car market by volume represents somewhere around 60% of the revenue for the German automakers. That means that Tesla doesn't have to be volume leader to make large revenues... they are going after the top end of the market where the revenues per vehicle and the gross margin per vehicle is very high.

In addition, Tesla is the world leader in terms of GWh of battery cells shipped by far. Last year, they shipped more battery cells than any other automaker. If you cut out BYD's uncompetitive LiFePO4 cells made for essentially Chinese only market, you can add together all the other automaker's lithium ion cells and not equal the amount Tesla shipped. That's not changing anytime soon. Since battery cell production plants in the 10's of GWh takes 2-4 years to build, we already know how much cell production will be available in 2018, 2019, and likely 2020. And since Chinese demand is so high, it is likely that substantially all of Chinese battery cell production output is consumed in China. That means Tesla's battery cell output will be more than 50% of the rest of the world through 2020, even with the massive expansion at LG Chem, Samsung SDI, and SKI amongst others.

For a battery electric vehicle, the most expensive parts are the battery cells, the battery pack integration, the battery management system, the motors, the inverter, the charger, the autonomous drive electronics, and the other vehicle electronics. Tesla is a volume leader in these parts. If another OEM can get light switches or wipers cheaper, ok... but those are cheaper parts anyways.

There are analogies one can make with Kodak and Blackberry/Nokia with this upcoming transition. Some of that will be instructive, like the way Apple locked up NAND flash production during the iPod heyday.

1) GM & Ford make most of their money on pickups and SUV's, not cars with low margins. In fact, Ford is moving Focus production out of the US for just that reason.

2) as volumes ramp up, I'd expect many Tier 1 suppliers to become more cost-effective on the electronics you mention. (Regardless, IIRC Tesla sourced some of their switchgear from a Daimler supplier)

What will be a question is the quality control that Tesla will be able to manage going forward - which is a hidden cost to manage against future profitability.

Will Tesla be able to manage it? The fact that the Model 3 design is so sparse and the rollout started with Tesla employees suggests that they are aware of this issue

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

They can produce tens of thousands of cars a week and they can produce EVs but they can't produce tens of thousands of EVs a week. Nobody has the battery capacity required. Nobody is building the battery capacity required. Nobody is building the Fast DC charging infrastructure necessary to make long distance travel anything other than an exercise in frustration.

You might be right though. Nothing is guaranteed. Tesla's future will be decided over the next two years on their ability to deliver Model 3 sales in volume, on time, on budget, and without large quality control issues.

I think that the other manufacturers have about a year to make a big battery commitment and get Gigafactory scale* capacity started (ie, groundbreaking) - or they are going to just let Tesla/Panasonic run away with the market in the West.

The lag time from deciding "GO" and actually having sizeable output is just too long.

*Doesn't matter whether the individual factories are the scale of the Gigafactory, just the output.

I just... I don't have a good feel for Tesla. I'm not claiming to be a stock guru, but I've made a lot of money on Alphabet and ARM for example by buying in early because it just seemed so inevitable that they couldn't help but make huge gains.

Tesla... I don't feel that way. (Space X on the other hand I'll be all over if there is ever an IPO)

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

I don't FEEL like Tesla will ever be worth what it's already 'worth', let alone make huge gains.

Lets meet back here in 5 years and laugh at me.

A friend at work put down $1,000 for a Model 3 earlier this year. She then reconsidered and bought a Mazda. Meanwhile, I bought a Chevy Bolt.

The Bolt is an incredible car. The only real deficiency I see is that the charging infrastructure isn't as robust. But in terms of design and production of real world cars, GM is arguably ahead of Tesla right now.

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

They can produce tens of thousands of cars a week and they can produce EVs but they can't produce tens of thousands of EVs a week. Nobody has the battery capacity required. Nobody is building the battery capacity required. Nobody is building the Fast DC charging infrastructure necessary to make long distance travel anything other than an exercise in frustration.

You might be right though. Nothing is guaranteed. Tesla's future will be decided over the next two years on their ability to deliver Model 3 sales in volume, on time, on budget, and without large quality control issues.

Well, we'll see. Volvo for example is switching to electrically powered and hybrid only from 2019, and they know how to build cars and make money.

Hybrids namely light hybrids (48V) you know the kind where the ICE gets 35 mpg and the hybrids gets 38 but they can say it is a hybrid.

I have no doubt Volvo could make a lot of EVs in about 5 years ... after they get serious a build a major battery factory. So when they break ground on that I will get interested until then it is just talk and compliance vehicles with small production runs <cough cough> Chevy Bolt.

Still I agree there is risk. If Tesla fucks up the Model 3 ramp up or has huge quality control issues or ends up needing to make last minute changes they will be in a world of hurt. This is sink or swim time. The Roadster, S, and X got them to this point but it will be the Model 3 and the Model 3 alone which pushes them into mass market.

Just curious, but why the Bolt hate? As of now, it has 9563 sold through July. That number is more than the full-year sales of cars like the Audi A5 (8354 in 2016) or Toyota 86 (7457). It's also about double the full-year sales of true compliance EV's like the Fiat 500e (5330) and VW e-Golf (3937), with sales now expanding throughout the US.

And arguably, I would have higher confidence in the quality of a Bolt than an early Model 3... and though they keep getting compared, the Model 3 is a different vehicle than the Bolt. To wit, in the extended test drive Kim Reynolds of Motor Trend wrote about, he said

Quote:

A quick summing of its features puts it at about $59,500 before incentives—including $1,500 for the larger 19-inch wheels (18 inches are standard), and a grand for the red multicoat paint. (You can have any no-extra-cost color as long as it’s black. Seriously.) And it’ll be a while before $35,000 versions are built, but reservation holders can place an order for an upgraded Model 3.

A vehicle that tops out at $60k plays in a different segment than one that peaks at $43k. So is the Bolt the ne-plus-ultra of EV's? No. But I wouldn't count GM out of doing something big with the platform. Barra's doing something much different than what "old GM" did - heck, who thought GM would have invested in Lyft, or even actually sell Opel/Vauxhall?

I wouldn't say it's out of the realm of possibility that Barra might decide to invest some of the current $25.7B cash/short term investments GM has reported into other EV production, or even infrastructure.

I just... I don't have a good feel for Tesla. I'm not claiming to be a stock guru, but I've made a lot of money on Alphabet and ARM for example by buying in early because it just seemed so inevitable that they couldn't help but make huge gains.

Tesla... I don't feel that way. (Space X on the other hand I'll be all over if there is ever an IPO)

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

I don't FEEL like Tesla will ever be worth what it's already 'worth', let alone make huge gains.

Lets meet back here in 5 years and laugh at me.

I wish I could agree with you, but I just can't. I've been looking at cars this month, either a small SUV for my wife or an electric for myself.

* The Ford salesman told me I didn't want the crap that Ford was selling, and refused to even sell it to me - and tried to get me into an Escape instead.* The Bolt was nice, but has a very small backseat - if you could even call it that.* The Leaf lacked pickup and wasn't very fun to drive.

Since I don't live in California, those are literally the only electric cars sold in my state - plus Tesla, and I can't afford an S/X. I have hope that the redesigned Leaf will be good without raising the price too much, but as of today, there's no a single affordable electric car I can and *want* to buy. So realistically, I'll wait a year and see if the Leaf is better, or if the Model 3's wait list is still as long. Tesla literally has no competition right now.

I think the big question is if the US automakers are willing to swallow the (perceived) risk of building a Gigafactory of their own.

That’s a battery pack integration factory... they don’t make battery cells there. Daimler will get cells from SK Innovation and other suppliers. The top tier automotive suppliers are LG Chem, Samsung SDI, Panasonic, and SKI. CATL is trying to get there and made some splashy announcements, but unclear how much of their announced plans have actual funding. Probably 4 GWh is actually funded at this point.

You can add LG Chem’s South Korea, U.S., China, and new EU factory capacity with Samsung SDI’s facilities including their new EU factory and SKI’s new expansions as well as CATL’s expansion, and all together it is less than what is operating and under construction already at the Tesla Gigafactory 1 (35 GWh). The finished Tesla Gigafactory 1 will be about 105 GWh in cell production. Tesla is also still using Panasonic’s factories in Osaka, Japan which shipped over 6 GWh for them last year and is on pace for more than 8 GWh this year. Therefore, Tesla has more battery cell production capacity online or coming online in 2018 than the rest of the industry making competitive NMC chemistry in 2019 and possibly 2020. There is more capacity making LiFePO4 chemistry (BYD) but that is a non-starter for competitive BEVs.

Unfortunately, Bloomberg New Energy Finance has been promoting an infographic which is extremely misleading. It gets the Tesla Gigafactory production capacity wrong and skips all Japanese production and most South Korean production.

So two thoughts. The first is I am sure the haters will jump on the $400M loss but $3B in the bank means two years worth of burn at this rate. They will win or lose on the Model 3 within two year.

The second is the flat Model S/X sales. I think this is an indication that the market for $70 to $130K EVs is only so big. They might get to 100K non Model 3 sales per year but it won't ever be 500K.

For those thinking of getting a model S 75 if you want a single motor act quick. Tesla sales rep told me they are discontinuing the single motor version at some point this year. I assume this is to create more price separation between Model 3 and Model S/X.

Yeah, weirdly Musk said that Model S and Model X demand is higher than it's been in a while, but from my reading of things they're still sitting on several thousand unsold cars.

I want to get an S or X but await actual self driving to be a done deal.

So, you're prepared to wait a decade or two (or maybe three or four if you want to avoid geofencing)?

No a couple of years. nVidia thinks their 2020 cards will do the trick.

I just... I don't have a good feel for Tesla. I'm not claiming to be a stock guru, but I've made a lot of money on Alphabet and ARM for example by buying in early because it just seemed so inevitable that they couldn't help but make huge gains.

Tesla... I don't feel that way. (Space X on the other hand I'll be all over if there is ever an IPO)

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

I don't FEEL like Tesla will ever be worth what it's already 'worth', let alone make huge gains.

Lets meet back here in 5 years and laugh at me.

I wish I could agree with you, but I just can't. I've been looking at cars this month, either a small SUV for my wife or an electric for myself.

* The Ford salesman told me I didn't want the crap that Ford was selling, and refused to even sell it to me - and tried to get me into an Escape instead.* The Bolt was nice, but has a very small backseat - if you could even call it that.* The Leaf lacked pickup and wasn't very fun to drive.

Since I don't live in California, those are literally the only electric cars sold in my state - plus Tesla, and I can't afford an S/X. I have hope that the redesigned Leaf will be good without raising the price too much, but as of today, there's no a single affordable electric car I can and *want* to buy. So realistically, I'll wait a year and see if the Leaf is better, or if the Model 3's wait list is still as long. Tesla literally has no competition right now.

Inside, the Model 3 boasts 42.7 inches of front-row legroom and 35.2 inches of second-row legroom. The Bolt keeps pace with 41.6 inches up front and 36.5 in the back. Standard headroom measurements are very similar on both models (39.6 front/37.7 rear on the Model 3, 39.7 front/37.9 rear on the Bolt). But in terms of cargo volume, the Model 3 offers 15 cubic feet while the Bolt boasts 16.9 cubic feet. Of course, perceived space is just as important as the numbers, so we won’t really know how big each model feels until we step inside both cars and compare them side by side.

Yeah, weirdly Musk said that Model S and Model X demand is higher than it's been in a while, but from my reading of things they're still sitting on several thousand unsold cars.

Unlike other automakers, they are also the dealer. Which means all cars en route to delivery to customers are still on Tesla's books. All vehicles sitting in showrooms are on Tesla's books. All vehicles built as inventory cars are on Tesla's books. All loaner vehicles too. Since deliveries can take 8-12 weeks depending on the market (especially China and the UK), it makes sense that they have thousands of vehicles in their finished goods inventory. And as they increase their production rate, the number of vehicles in finished goods inventory naturally increases too, as the length of time to deliver remains relatively constant or actually increasing as they deliver to new, more remote markets.

So when they were building 500/week, then 4 weeks of inventory was 2,000 vehicles. As they are building 2,200/week, then 4 weeks of inventory is 8,800 vehicles. Add in 300 service centers and retail locations with about 10-30 cars between showroom, demo, and service loaners, that's another 6,000 or so. That's just to operate the business on a normal basis.

They made 25.000 cars and sold 22.000. So unless they had 0 cars in transit in their last report that's 3.000 cars made that they didn't sell. They might be over producing for a number of reasons (planning on a line retrofit) but it's weird in their case to have that much unsold inventory made.

Just curious, but why the Bolt hate? As of now, it has 9563 sold through July. That number is more than the full-year sales of cars like the Audi A5 (8354 in 2016) or Toyota 86 (7457). It's also about double the full-year sales of true compliance EV's like the Fiat 500e (5330) and VW e-Golf (3937), with sales now expanding throughout the US.

Hate on the Bolt probably isn’t the right term. How about drawing a distinction between the Bolt and the Model 3. Quite a few commentators, financial analysts, and GM themselves put forth the Bolt as a competitor to the Tesla Mode 3, and in the eyes of some, as a Tesla killer. Therefore figuring out what is the difference is of interest to many.

The Bolt derives from the Chevy Trax and the Buick Encore, small CUVs that are priced around $20-25k designed by GM Korea. The Bolt came to market quickly with significant help from LG who makes most of the EV parts for the vehicle. In order to shoehorn a very impressive 60 kWh of battery cells and achieve their price point, they did skimp on the interior, specifically the seats. There are a lot of complaints about the seats. Further, they didn’t wait for the next generation of CCS DC fast charging and shipped the Bolt with some lackluster charging capability. Right now, the average rate of DC fast charging (DCFC) in a Bolt with available 125 amp charging is about 40 kW to 80%. It makes for a terrible road tripping cadence. Plus it is a stubby CUV form factor and aerodynamics suffers which means a significant difference between the city range and highway range. GM has categorically stated they are not interested in building a charging infrastructure for the car. Basically, the Bolt is a limited ecosystem BEV that competes with $20-25k internal combustion engine vehicles and sells for $35-40k. Incentives can bring that down to a competitive price.

In contrast, the Model 3 is designed to compete against entry luxury sport sedans priced at $35k to $70k without incentives. It has access to the best DCFC network, one that Tesla has been building for years. Using the Tesla Superchargers, the Model 3 likely charges about 40-60% faster than a Bolt on CCS. The build out of the Supercharger system has allowed a lot of long distance travel. It also has access to Tesla’s destination charging program which has been installing L2 chargers at hotels, BnB’s, conference centers, and so forth in addition to other L2 charging. Tesla vehicles have historically had a higher highway MPGe rating than city MPGe rating and are designed for long range while driving at high speeds on the highway (60-80 mph). The Model 3 is no different in this regard. We will see soon about the highway range comparison. The Model 3 has the driving dynamics and wider cabin that lets it compete head to head against German and Japanese entry luxury sport sedans. It also has the most advanced active safety driving system, the Tesla Autopilot. The hardware is built into every Model 3 and all have the safety features like full speed AEB. In essence, Tesla’s vehicles are next generation designs with full autonomy in mind and the supporting charging infrastructure.

At the core, Tesla treats electric vehicles as a do or die endeavor, which it is for them. GM treats electric vehicles as an interesting side project that the government is mandating. Instead of tackling whatever gnarly challenges exist for BEVs, GM is perfectly willing to sell you a PHEV or gas car instead. For quite a few people, the Bolt is a terrific vehicle and suits their needs perfectly. There are plenty of advantages to the Bolt, including class leading city range, hatchback form factor, and wide dealership service network. Each EV sold helps the transition to sustainable transport. But there are differences differences between what GM is doing and what Tesla is doing. Not to mention that GM lawyers have been fighting against Tesla’s ability to direct sell in various states in the U.S. which is a bit underhanded.

Yeah, weirdly Musk said that Model S and Model X demand is higher than it's been in a while, but from my reading of things they're still sitting on several thousand unsold cars.

Unlike other automakers, they are also the dealer. Which means all cars en route to delivery to customers are still on Tesla's books. All vehicles sitting in showrooms are on Tesla's books. All vehicles built as inventory cars are on Tesla's books. All loaner vehicles too. Since deliveries can take 8-12 weeks depending on the market (especially China and the UK), it makes sense that they have thousands of vehicles in their finished goods inventory. And as they increase their production rate, the number of vehicles in finished goods inventory naturally increases too, as the length of time to deliver remains relatively constant or actually increasing as they deliver to new, more remote markets.

So when they were building 500/week, then 4 weeks of inventory was 2,000 vehicles. As they are building 2,200/week, then 4 weeks of inventory is 8,800 vehicles. Add in 300 service centers and retail locations with about 10-30 cars between showroom, demo, and service loaners, that's another 6,000 or so. That's just to operate the business on a normal basis.

They made 25.000 cars and sold 22.000. So unless they had 0 cars in transit in their last report that's 3.000 cars made that they didn't sell. They might be over producing for a number of reasons (planning on a line retrofit) but it's weird in their case to have that much unsold inventory made.

It is impossible for them to have zero in transit. It is also impossible for them to operate their sales and service locations with zero inventory.

Tesla is going be in a world of hurt if/when the rest of the automotive industry catches up in distance and quickness and brings along a cockpit that is not spartan and creaky...

Or government subsidies dry up and they have to compete toe-to-toe with IC vehicles on cost. The market for EV's is less than 1% of the total automotive market so it will be a long time before they are able to achieve similar economies of scale to more mainstream automakers.

The solution to that is easy: increase the cost of ICE vehicles to reflect their true cost, including carbon/environmental footprint.

If Gas prices where around 10 USD per gallon (which they should be) then perhaps we could stop arguing about how horribly "expensive" EVs are? The only reason EVs can't compete with ICE vehicles is because the world is indirectly subsidizing anything and everything that burns fossil fuel.

Normally you'd tax each (metric) ton of CO2 similarly. For example a $1/tax on gallon of fuel equals a tax rate of roughly $110 / ton of CO2.

If you'd tax CO2 with $110/ton (equivalent of $1/gallon of gas), it would equate to a a cost of 6.3c/kWh for natural gas electricity producer. Not completely unreasonable I think.

You are proposing something like $6/gallon tax on fuel, which would equate about 40c/kWh tax on electricity generated from natural gas and much higher for coal plants. I don't see this happening any time soon...

What do you think would happen to renewable energy? Could this approach - strictly theoretically speaking off course - make it attractive to increase use of hydro, solar and wind power?

EVs are no good if they're just a new way to burn fossil fuel. They need to be the easy way to equalize the natural instability of renewable energy. Which I also think is quite realistic.

Of course it would. And it would be by far better way of encouraging renewables than stupid feed-in tariffs, tax credits for electric cars and solar roofs etc. At the moment I see it politically very much impossible. Even Paris accord (that US doesn't take part) doesn't go anywhere towards taxing CO2 production globally, which would be the ideal.

Let's put these numbers into some kind of perspective:

"In 2014, U.S. greenhouse gas emissions totaled 6,870 million metric tons of carbon dioxide equivalents" (EPA.gov report)"The U.S. government's total revenue is estimated to be $3.654 trillion for fiscal year 2018."(thebalance.com article).

Divide these and you'll figure out that a tax of $532 / metric ton of CO2 could replace all and every federal tax in US. So if natural gas electricity was taxed at about 35c/kWh and gas something like $5/gallon, you could replace all federal taxes.

I would be happy to see a $150/ton CO2 tax if major countries would all sign up for it. They could considerable reduce other taxation to offset the cost to the people while heavily moving incentives for business to reduce CO2 generation. Even $50/ton could make a difference and it would be easier to accept for developing nations.

One of the Canadian prime ministerial candidates proposed that a few years ago. "Cut income taxes, shift to pollution. No change in total taxation."He got roundly trounced. Perhaps, though, attitudes may have changed since then, now that low-carbon alternatives are becoming more realistic?

The only way we're going to effect a mass change-over from fossil fuels to renewable sources and efficient storage is via economic forces. In Norway, for example, the Leaf, Model S, and i3 are all on the "top fifteen" best-seller list. Norway taxes the hell out of both fuel and internal-combustion engines because of all the otherwise-unfunded externalities associated with them, so there's a strong personal financial incentive to buy something non-polluting. A Model S, in Oslo, is actually cheaper than a Subaru WRX.

I suspect that a non-negligible factor in this is whether the people, in general, trust their government. Norwegians generally believe that their government will put the fuel, CO2, etc. taxes to good use. Americans seem, on average, to be of the opinion that none of their governments can be trusted to use that money wisely, let alone collect it in the first place.

I just... I don't have a good feel for Tesla. I'm not claiming to be a stock guru, but I've made a lot of money on Alphabet and ARM for example by buying in early because it just seemed so inevitable that they couldn't help but make huge gains.

Tesla... I don't feel that way. (Space X on the other hand I'll be all over if there is ever an IPO)

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

I don't FEEL like Tesla will ever be worth what it's already 'worth', let alone make huge gains.

Lets meet back here in 5 years and laugh at me.

I think the brand recognition is something to keep in mind. Ordinary people know about Tesla. Tesla has a reputation for being the cool, aspirational car company. I see it as being similar to Apple in some ways - they do some things very well, but in other ways their products are on-par with or even inferior to their competition. Yet Apple products still sell in mind-boggling numbers.

In 10 years, I bet pretty much all the major auto groups will have fairly successful EVs. Yet, I would not be surprised if Tesla continues to do well, if for no other reason than they've very successfully created their own version of the famous "reality distortion field."

Of course, today isn't 10 years from now, and it sounds like for the moment the Model 3 is objectively as good if not better than any other EV out there (controversial dash and interior aside).

I think the soft demand for the Chevrolet Bolt demonstrates a long term issue for Tesla, Chevrolet obviously didn't sell well because of image and lack of presence in key EV markets (particularly urban California). Problems that Tesla doesn't have, right?

BUT it does indicate that the organic demand for long range EVs isn't enough to overcome Chevy's brand problems. EVs are of course a brilliant idea, particularly for commuting, but if they were such a compelling economic and convenience offering, then Chevy would sell everything they had the way that Droid did for smartphones.

A lot of the value on these cars is still unfortunately the tax break for the well heeled, and Tesla lost theirs (it's a temporary setup per brand for some reason). Probably why Musk started kissing up to Trump, which imo looks hopeless as a strategy.

Yeah, weirdly Musk said that Model S and Model X demand is higher than it's been in a while, but from my reading of things they're still sitting on several thousand unsold cars.

Unlike other automakers, they are also the dealer. Which means all cars en route to delivery to customers are still on Tesla's books. All vehicles sitting in showrooms are on Tesla's books. All vehicles built as inventory cars are on Tesla's books. All loaner vehicles too. Since deliveries can take 8-12 weeks depending on the market (especially China and the UK), it makes sense that they have thousands of vehicles in their finished goods inventory. And as they increase their production rate, the number of vehicles in finished goods inventory naturally increases too, as the length of time to deliver remains relatively constant or actually increasing as they deliver to new, more remote markets.

So when they were building 500/week, then 4 weeks of inventory was 2,000 vehicles. As they are building 2,200/week, then 4 weeks of inventory is 8,800 vehicles. Add in 300 service centers and retail locations with about 10-30 cars between showroom, demo, and service loaners, that's another 6,000 or so. That's just to operate the business on a normal basis.

They made 25.000 cars and sold 22.000. So unless they had 0 cars in transit in their last report that's 3.000 cars made that they didn't sell. They might be over producing for a number of reasons (planning on a line retrofit) but it's weird in their case to have that much unsold inventory made.

It is impossible for them to have zero in transit. It is also impossible for them to operate their sales and service locations with zero inventory.

This argument is kind of pointless. This is the business model Musk chose, and it results in more inventory. No, it's not exactly analogous to the other car makers as a metric, but he's still on the hook for them in terms of cash flow, unlike others who can push things out to dealers.

This argument is kind of pointless. This is the business model Musk chose, and it results in more inventory. No, it's not exactly analogous to the other car makers as a metric, but he's still on the hook for them in terms of cash flow, unlike others who can push things out to dealers.

For most people that inquire, the point is to understand the difference in business models in order to do like for like comparisons as well as understand the trajectory of the business. To that end, the increase in finished goods inventory naturally makes one wonder about demand for the products especially in the comparison with other automakers. Therefore understanding that Tesla carries the inventory on their books far beyond the point where other automakers do on their books helps explain the difference in finished goods inventory.

To the overall transformation of light passenger vehicles to electrification, there is a lot of interest in knowing how things are going with one of the leaders in the effort.

I think the soft demand for the Chevrolet Bolt demonstrates a long term issue for Tesla, Chevrolet obviously didn't sell well because of image and lack of presence in key EV markets (particularly urban California). Problems that Tesla doesn't have, right?

BUT it does indicate that the organic demand for long range EVs isn't enough to overcome Chevy's brand problems. EVs are of course a brilliant idea, particularly for commuting, but if they were such a compelling economic and convenience offering, then Chevy would sell everything they had the way that Droid did for smartphones.

A lot of the value on these cars is still unfortunately the tax break for the well heeled, and Tesla lost theirs (it's a temporary setup per brand for some reason). Probably why Musk started kissing up to Trump, which imo looks hopeless as a strategy.

This is one of the reasons why GM is not so much lauded for the Bolt. It is like falling down on the 20 yard line when the end zone was uncontested. The Bolt, while a commendable effort, just isn’t quite enough. GM showed no interest in charging infrastructure and crippled the DC fast charge capabilities. After all, they have a Chevy Volt they can sell you. The first year’s production numbers happen to coincide pretty closely to what they need to make to take advantage of CARB ZEV credits and not much more. They have stuffed the channel in those CARB states while other states and other countries are starved for inventory.

It doesn’t help the Bolt that Tesla took 400,000+ reservations for the Model 3, presumably 20-25% of that in California and those other CARB ZEV states. Those buyers were mostly locked up. And plenty have waited to see about the Model 3 and the resulting line. I suspect now, those at the end of the line or not yet in line may opt to get a Bolt as an interim vehicle.

I just... I don't have a good feel for Tesla. I'm not claiming to be a stock guru, but I've made a lot of money on Alphabet and ARM for example by buying in early because it just seemed so inevitable that they couldn't help but make huge gains.

Tesla... I don't feel that way. (Space X on the other hand I'll be all over if there is ever an IPO)

GM, Ford, BMW etc etc already know how to produce tens of thousands of cars a week, and have their own electrical vehicles already. I don't see how Tesla overcome that.

I don't FEEL like Tesla will ever be worth what it's already 'worth', let alone make huge gains.

Lets meet back here in 5 years and laugh at me.

I wish I could agree with you, but I just can't. I've been looking at cars this month, either a small SUV for my wife or an electric for myself.

* The Ford salesman told me I didn't want the crap that Ford was selling, and refused to even sell it to me - and tried to get me into an Escape instead.* The Bolt was nice, but has a very small backseat - if you could even call it that.* The Leaf lacked pickup and wasn't very fun to drive.

Since I don't live in California, those are literally the only electric cars sold in my state - plus Tesla, and I can't afford an S/X. I have hope that the redesigned Leaf will be good without raising the price too much, but as of today, there's no a single affordable electric car I can and *want* to buy. So realistically, I'll wait a year and see if the Leaf is better, or if the Model 3's wait list is still as long. Tesla literally has no competition right now.

The Bolt's back seat has more room than a VW Golf or Ford Focus. I'm honestly baffled that you picked that as it's weak point and a reason not to buy one.

People talk about burn rate but it is very important to know where that burn is going. The vast majority of it is going into plant and equipment which will end up making them money over time. It isn't like they're blowing it on gold leaf furniture or junkets for the company to go to the Caribbean. As a result, the expenditures for the Model 3 ramp will end up increasing revenue. At a run rate of 5,000/week or so which they hope they get to at the end of this year, they hit a point where their gross profit exceeds their opex. And that means positive cash flow from operations. As they get to 10k/week through 2018, their automotive business starts to really generate profits. Now, what they choose to do with those profits becomes an issue... most likely, they plow it back in for expansion which includes new product lines.

The biggest issue has been cash in order to make it through Model 3 launch and they appear to be well positioned.

I haven't been following Tesla but compared to the traditional automotive industry in the US, how automated is the production line at Tesla? I wonder part of the drive down in costs will be the automation of production lines when compared to the rest of the US industry that still seems to have a lot of people doing jobs that in Japan are automated resulting a factory at best having a dozen workers at anyone time. What I'd love to see is Tesla to branch out into building scooters and motorcycles - I'd love to trade in my 50cc scooter for a battery powered one that I can recharge at home over night and charge when I get to work if I want.

Tesla’s automation level for the S/X production is behind top tier OEMs, which makes their resulting gross margin pretty impressive. In other words, given their relative ineptitude/inefficiency at making vehicles, the fact they can achieve such gross margins is pretty good. The resulting products these days has a lot less initial quality flaws. Their rates are now pretty much within the pack of other feature laden luxury auto makes, most of which don’t have particularly impressive initial quality stats. The overall design of the Tesla Model S and X is impressive, but they are difficult to build. They are clearly looking to catch up with the Model 3 production and hope to surpass with the Model Y. Tesla has been making steady progress in learning how to make vehicles and design vehicles for mass production. This means they do have opportunities to reduce costs substantially in the future.

Inside, the Model 3 boasts 42.7 inches of front-row legroom and 35.2 inches of second-row legroom. The Bolt keeps pace with 41.6 inches up front and 36.5 in the back. Standard headroom measurements are very similar on both models (39.6 front/37.7 rear on the Model 3, 39.7 front/37.9 rear on the Bolt). But in terms of cargo volume, the Model 3 offers 15 cubic feet while the Bolt boasts 16.9 cubic feet. Of course, perceived space is just as important as the numbers, so we won’t really know how big each model feels until we step inside both cars and compare them side by side.